<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 0-26790
eSynch Corporation
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(Exact name of small business issuer as specified in its charter)
DELAWARE 87-0461856
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
15502 Mosher
Tustin, CA 92780
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(Address of principal executive offices)
(714) 258-1900
------------------------------------------------
(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at November 12, 1999, 1999: 9,797,143
Transitional Small Business Format: Yes ( ) No (x)
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TABLE OF CONTENTS
PART I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - September 30, 1999
(Unaudited)
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1999 and 1998 (Unaudited)
Condensed Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1999 and 1998 (Unaudited)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form
Signatures
PART I FINANCIAL INFORMATION
Item I - Financial Statements
<PAGE>
ESYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1999
(UNAUDITED)
ASSETS
Current Assets
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . $ 734,490
Inventory . . . . . . . . . . . . . . . . . . . . . . . 87,593
Other receivable. . . . . . . . . . . . . . . . . . . . 14,608
Prepaid expenses. . . . . . . . . . . . . . . . . . . . 92,203
-----------
Total Current Assets. . . . . . . . . . . . . . . . . 928,894
-----------
Property and Equipment, net . . . . . . . . . . . . . . . . 668,724
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . 67,788
Software licenses 144,902
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . 4,247,815
-----------
Total Assets. . . . . . . . . . . . . . . . . . . . . $ 6,058,123
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable . . . . . . . . . . . . . . . . . . . . $ 1,589,134
Accrued liabilities. . . . . . . . . . . . . . . . . . . 879,306
Value of Common Stock to be Issued . . . . . . . . . . . 440,625
Notes payable. . . . . . . . . . . . . . . . . . . . . . 380,491
-----------
Total Current Liabilities . . . . . . . . . . . . . . 3,289,556
Notes Payable . . . . . . . . . . . . . . . . . . . . . . . 422,153
Redeemable Preferred Stock - Series I, $0.001 par value;
600,000 shares authorized; 600,000 shares issued
and outstanding; liquidation preference - $600,000. . . . . 600
Redeemable Preferred Stock - Series J, $0.001 par value
275 shares authorized: 262.5 shares and outstanding;
liquidation preference - $2,625,000 263
-----------
Stockholders' Equity
Preferred stock - $0.001 par value; 400,000 shares
authorized; none issued or outstanding. . . . . . . . . -
Common stock - $0.001 par value; 20,000,000 shares
authorized; 9,797,143 shares issued and outstanding . . 9,797
Additional paid-in capital . . . . . . . . . . . . . . . 14,683,713
Note receivable from shareholder . . . . . . . . . . . . (163,047)
Accumulated deficit. . . . . . . . . . . . . . . . . . . (12,184,912)
-----------
Total Stockholders' Equity. . . . . . . . . . . . . . 2,345,551
-----------
Total Liabilities and Stockholders' Equity. . . . . . . . . $ 6,058,123
===========
See the accompanying notes to the condensed consolidated financial statements.
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<PAGE>
ESYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------- ------------------------
1999 1998 1999 1998
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net Product Sales. . . . . . . $ 255,668 $ - $ 917,400 $ 15,293
----------- ------------ ----------- -----------
Costs and Operating Expenses
Costs of products sold. . 91,521 459,944 9,940
General and administrative. 1,255,677 355,052 2,555,008 738,068
Stock Issued for Services . 308,238 112,108 1,622,164 112,108
Stock Based Compensation. . 204,000 - 2,021,347 -
Amortization of Debt
Discount. . . . . . . . . 355,567 355,567
Amortization of Goodwill. . 406,878 - 818,756 -
----------- ------------ ----------- -----------
Total Costs and Operating
Expenses . . . . . . . . 2,266,314 822,727 7,477,219 1,215,683
----------- ------------ ----------- -----------
Operating Loss . . . . . . . . (2,010,646) (822,727) (6,559,819) (1,200,390)
Other Income . . . . . . . . . 6,805 87,000 13,458
Interest expense . . . . . . . (15,210) ( 3,627) (60,839) (5,571)
----------- ------------ ----------- -----------
Net Loss . . . . . . . . $(2,025,856) $ (819,549) $(6,533,658) $(1,192,503)
=========== ============ =========== ===========
Basic and Diluted Loss Per
Common Share . . . . . . . . . $ ( 0.22) $ (.16) $ (.78) $ (.26)
=========== ============ =========== ===========
Weighted average number of
common shares used in per
share calculation. . . . . . 9,266,893 5,075,328 8,389,358 4,548,202
=========== ============ =========== ===========
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
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<PAGE>
ESYNCH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
-------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities
Net loss. . . . . . . . . . . . . . . . . . . . $(6,533,658) $(1,192,503)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization. . . . . . . . 27,765 29,834
Amortization of goodwill . . . . . . . . . . 818,756
Stock issued for services. . . . . . . . . . 1,429,944 112,108
Amortization of Debt Discount. . . . . . . . 355,567
Liability for stock to be issued for
services . . . . . . . . . . . . . . . . 440,625 -
Stock issued for settlement of lawsuit . . . 26,456 -
Stock Based Compensation . . . . . . . . . . 2,021,347 -
Changes in operating assets and liabilities
net of the effects of the acquisitions
Accounts receivable . . . . . . . . . . . . ( 2,353) 54,767
Inventory . . . . . . . . . . . . . . . . . (12,211) -
Prepaid expenses . . . . . . . . . . . . . . (53,881) -
Other assets . . . . . . . . . . . . . . . . (56,611) -
Accounts payable . . . . . . . . . . . . . . ( 9,723) 223,221
Accrued liabilities. . . . . . . . . . . . . (168,766)
----------- -----------
Net Cash Used in Operating Activities . . . . (2,072,310) (417,006)
----------- -----------
Cash Flows From Investing Activities
Proceeds from sale of SoftKat, net. . . . . . . 50,000 -
Acquisition of property and equipment . . . . . ( 69,185) -
Kiss cash acquired. . . . . . . . . . . . . . . 49,233 -
----------- -----------
Net Cash Used in Investing Activities . . . . 30,048 (771)
----------- -----------
Cash Flows From Financing Activities
Stock issued for cash 2,650,000 -
Cash received on notes receivable issued for
common stock . . . . . . . . . . . . . . . . . 322,509 -
Proceeds from borrowing . . . . . . . . . . . . 371,070 428,071
Payments on notes payable . . . . . . . . . . . (568,240) -
----------- -----------
Net Cash Provided by Financing Activities. . 2,775,339 428,071
----------- -----------
Net Increase in Cash . . . . . . . . . . . . . . . 733,077 11,065
Cash at Beginning of Period. . . . . . . . . . . . 1,413 -
----------- -----------
Cash at End of Period. . . . . . . . . . . . . . . $ 734,490 $ 11,065
=========== ===========
</TABLE>
See the accompanying notes to the condensed consolidated financial statements.
-3-
<PAGE>
eSYNCH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1--NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF OPERATIONS -- Intermark Corporation("Intermark")
was incorporated under the laws of the State of California in October 1995.
On August 5, 1998, Intermark was reorganized into Innovus Corporation, a
publicly-held shell corporation. By shareholder action, Innovus Corporation,
the parent company, changed its name to eSynch Corporation ("eSynch") on
November 9, 1998. On November 17, 1998, eSynch acquired SoftKat Inc.
("SoftKat"). On May 25, 1999, SoftKat was sold to a third-party. See Note 2.
On April 1, 1999, eSynch consummated an acquisition of Kiss Software
Corporation ("Kiss")whereby under the terms of an Agreement and Plan of
Merger Kiss became a wholly owned subsidiary of eSynch. Kiss was incorporated
under the laws of California on February 14, 1997. The primary activities of
Kiss have consisted of distributing computer utility software principally
through wholesale distribution channels.
On September 30, 1999, eSynch consummated an acquisition of Oxford Media
Corp. ("Oxford") whereby under the terms of an Agreement and Plan of Merger,
Oxford became a wholly owned subsid1ary of eSynch. Oxford was incorporated in
January, 1999 and is a developer of digital technologies for video-on-demand
and DVD Conversion.
The primary activities of eSynch, the consolidated company, have consisted of
raising capital, and acquiring Companies in the Internet, Software and
related areas.
PRINCIPLES OF CONSOLIDATION -- The accompanying consolidated financial
statements include the accounts of Intermark and eSynch for all periods
presented, and the accounts of SoftKat, Inc. to May 25, 1999, the accounts of
Kiss since April 1, 1999 and Oxford Media Corp. since September 30, 1999.
These entities are collectively referred to as "eSynch" or the "Company". All
inter-company transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumption that affect the reported amounts in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
INTERIM UNAUDITED FINANCIAL INFORMATION -- The accompanying condensed
financial statements have been prepared by the Company and are not audited.
In the opinion of management, all adjustments necessary for a fair
presentation have been included and consist only of normal recurring
adjustments except as disclosed herein. The financial position and results of
operations presented in the accompanying financial statements are not
necessarily indicative of the results to be generated for the remainder of
1999.
These financial statements have been condensed pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and disclosures normally included in financial statements have been
<PAGE>
condensed or omitted. These financial statements should be read in connection
with annual financial statements included in the Company's Form 10-KSB dated
December 31, 1998.
BUSINESS CONDITION -- The financial statements have been prepared on the
basis of the Company continuing as a going concern. The Company has incurred
losses from operations and negative tangible net worth of $1,902,264. These
conditions raise substantial doubt regarding the Company's ability to
continue as a going concern. Management's plan to mitigate the impact of
these conditions is to obtain additional equity financing through the
issuance of the Company's common stock, convertible preferred stock or
warrants.
The Company is also currently in negotiations for additional financing
arrangements. However, realization of the proceeds from these potential
transactions is not assured. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets or amounts and classifications of liabilities that might be necessary
should the Company be unable to continue as a going concern.
CONCENTRATION OF RISK AND MAJOR CUSTOMERS -- The Company operates exclusively
in the software industry, accordingly, segment information relating to
operations in different industries is not presented in these financial
statements. The concentration of business in the highly competitive software
industry subjects the Company to concentrated market risk. Sales to any major
customer during the quarters and nine months September 30, 1999 and 1998 were
not significant.
FAIR VALUES OF FINANCIAL INSTRUMENTS -- The amounts reported as cash,
accounts payable, notes payable, and liabilities relating to assets to be
sold are considered to reasonable approximations of their fair values. The
fair value estimates were based on market information available to management
at the time of the preparation of the financial statements.
LOSS PER SHARE -- The Company computes basic and diluted loss per share in
accordance with Statement of Financial Accounting Standards No. 128, ("SFAS
128"), Earnings Per Share. Basic loss per common share is computed by
dividing net loss available to common stockholders by the weighted-average
number of common shares outstanding during the period. Diluted loss per share
is calculated to give effect to stock warrants, options and convertible notes
payable except during loss periods when those potentially issuable common
shares would decrease the loss per share. 3,560,026 and 151,133 potentially
issuable common shares outstanding at September 30, 1999 and 1998 were
excluded from the calculation of diluted loss per share for the quarters
ended September 30, 1999 and 1998, as they would have decreased the loss per
share, respectively.
REVENUE RECOGNITION -- The Company sells software products at fixed prices
for which the right to return is granted to the buyer. Accordingly, revenue
is recognized when the buyer has paid for the products and the amount of
future returns can be reasonably estimated. Cost of products sold is
recognized at the date the sale is recognized less an estimate for sales
returns. Until the sale is recognized, products purchased from publishers are
accounted for as consigned product from publishers and the related cost is
not reflected in the financial statements with the exception of a limited
amount of software inventory owned by the Company at period-end.
<PAGE>
NOTE 2--ACQUISITIONS
SOFTKAT -- On November 17, 1998, the Company acquired SoftKat, Inc,. a
California corporation primarily engaged in the wholesale distribution of
computer software games. In exchange for the SoftKat common shares, the
Company issued 720,000 common shares and 600,000 shares of Series I
redeemable, convertible preferred shares. Up to an additional 720,000 common
shares are contingently issuable based upon the difference between the market
price of the common stock one year from the date of acquisition and a target
market price. In November, 1999 the target market price was achieved and the
share were no longer issuable. The acquisition was accounted for using the
purchase method of accounting. The acquisition purchase price, based upon the
fair value of the common and preferred stock issued and the additional
contingently issuable common shares, was $2,670,000. The excess of the
purchase price over the estimated fair value of the identifiable acquired
assets less liabilities assumed was $6,882,300, which was recognized as
goodwill. The results of operations of SoftKat have been included in the June
30, 1999 (through May 25, 1999 date of sale) condensed consolidated financial
statements.
In February 1999, Management of the Company decided to dispose of SoftKat
because it did not meet the core business objectives of the Company. On May
25, 1999, SoftKat was sold to a third party for $50,000 cash and a note
receivable for $100,000 which resulted in the recognition of an impairment
loss of $2,323,841. The subsequent sale and resulting loss provided evidence
of conditions that existed at December 31, 1998; therefore, an impairment
loss was recognized in 1998 in accordance with SFAS No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
The impairment loss was determined by the excess of the carrying amount of
the assets in excess of the $50,000 subsequently collected and the amount of
the related liabilities. The $100,000 note receivable was not considered in
the computation of the impairment loss or the resulting carrying value of the
assets to be sold, but will be recognized when collected. The resulting
amount of the assets to be sold and the related liabilities assumed by the
buyer have been presented separately in the accompanying balance sheet.
Effective April 1, 1999, the Company completed the acquisition of Kiss
Software Corporation, California corporation engaged in the wholesale and
retail distribution of computer and Internet utility software products. Under
the agreement, shareholders of Kiss agreed to exchange each of their common
shares for.181557136 common shares of eSynch and each of their preferred
shares for .4183964 common shares of eSynch. The exchange resulted in the
Company issuing 1,428,134 common shares to Kiss shareholders. The Company
also issued 163,187 options in conjunction with the purchase. These options
are exercisable at $2.05 per share. During the second quarter 1999, the
acquisition was accounted for using the purchase method of accounting. The
acquisition purchase price, based upon the fair value of the common stock and
options issued, has been estimated at $3,965,570. The excess of the purchase
price over the estimated fair value of the identifiable acquired assets less
liabilities assumed was $5,061,571 (unaudited), which was recognized as
goodwill. Goodwill is being amortized over approximately 3 years on a
straight-line basis.
Effective September 30, 1999, the Company completed the acquisition of Oxford
Media Corp., ("Oxford") engaged in DVD video encoding, compression and
authoring. Under the Agreement the shareholders of Oxford exchanged all the
outstanding shares of
<PAGE>
Oxford Common Stock for 450,000 shares of the Company's Common Stock. During
the third quarter, the acquisition was accounted for using the purchase
method of accounting and the purchase price of the acquired assets was
computed to be $720,000 which was attributed to the assets acquired including
software licenses in the amount of $144,902. Oxford received a non-exclusive
license from Oxford Management Corporation, a Nevada corporation, which is a
license of proprietary software and source code -on-demand hotel pay-for-view
system. The value of the licenses is being amortized over three years.
In addition, the Company entered into another license agreement with Oxford
Management. In this license agreement, the Company granted Oxford Management
a license to sell advertising and promotional offers that will be displayed
by means of operation of certain software products of the Company or its
subsidiaries.
NOTE 3--PREPAID EXPENSES
In June 1999, the Company prepaid consulting services by issuing 54,000
common shares of stock to third-party consultants. The prepaid services
recognized from the issuance of these shares was $111,380. As of September
30, 1999, $57,751 of the prepaid services had been performed by the
consultants and therefore, were expensed by the Company.
NOTE 4--NOTES PAYABLE
In August 1999, the Company repaid $250,000 borrowed from a third-party.
Notes Payable long-term include a note to an Officer-Shareholder in the
amount of $195,270.
NOTE 5--STOCK BASED COMPENSATION
The Company issued stock options for 885,000 shares of Common stock to
Officers and Employees in connection with Employment Agreements signed on
April 1, 1999.The options allowed for the exercise of options over various
periods at a price of $1.00 per share. In addition, on April 1, 1999, an
officer of the Company was granted warrants to purchase 400,000 shares of
common stock at $0.05 per share. In September, 1999 the Company modified the
previously granted warrants to 450,000 shares at $0.50 per share and granted
new stock options under Employment Agreements of 390,000 shares at a price of
$1.00 per share and granted an officer warrants to purchase 250,000 shares at
$1.00 per share. The charge under stock based compensation was $204,000 and
$2,021,347 for the three months and nine months ended September 30, 1999.
NOTE 6--STOCKHOLDERS' EQUITY
On July 16, 1999 the Company issued 2,000 shares of common stock for interest
of $6,000.
During the three months ended September 30, 1999, the Company issued 105,000
and shares of common stock for services. The value of the services was
determined based upon the trading price of the Company's common stock on the
date of issuance. The services were valued at $308,238 and were expensed in
the three month period ended September 30, 1999.
The Series I redeemable preferred stock has a liquidation preference of
$1.00. The Company is required to redeem 200,000 shares of the preferred
stock at $1.00 per share upon obtaining financing of $1,500,000 or more
<PAGE>
from any source and must redeem an additional 200,000 shares of preferred
stock upon obtaining an additional $3,000,000 in funding. Dividends on the
preferred stock are payable prior and in preference to any declaration or
payment of any dividends on the common stock, when, as, and if declared by
the Board of Directors. However, there is no stated dividend rate. The
preferred stock is convertible, at the option of the holder, into common
stock at the lesser of $3.00 per share. The preferred stock has voting rights
equivalent to the number of common shares into which it can be converted and
has additional voting rights with respect to approval of any issuance of a
senior series of preferred shares.
Effective August 13, 1999, the Company entered into an Agreement from an
investing source for equity financing in an aggregate amount of $2,625,000,
subject to certain terms and conditions. The financing is in the form of
preferred stock and warrants issued by the Company. The Company will have
issued 275 shares of Series J Preferred Stock aggregately, with each share
convertible into common stock under certain conditions as described. In
addition the Company issued warrants to purchase 187,500 shares of the
Company common stock at a price equal to 115% of the closing stock price on
the date before the closing date. The Series J Preferred Stock is convertible
into the Company's common stock at a price equal to the lower of 80% of the
average closing stock price the lowest six trading days in the consecutive 20
days prior to conversion subject to a floor in the conversion price. The
Company had received $2,500,000 of the total amount as of September 30, 1999.
The shares are redeemable by the Company for cash upon 30 days prior written
notice for a price of 120% of the original issue price plus accrued
dividends. Dividends accrue at the rate of 7% of from the original issue
date, but are payable only upon conversion or redemption.
The Company is obligated, at its expense, to file for the registration of the
common stock issuable upon conversion within 60 days of September 30, 1999,
with an effective date within 150 days after September 30, 1999 or the
investors will be entitled to a registration payment equal to 2% of the
purchase price for the first 30 days the Company is tardy and 3% for every 30
day period thereafter.
NOTE 7--COMMITMENTS AND CONTINGENCIES
Litigation:
The Company has been name as an additional defendant in claims against
SoftKat under the theory of successor liability. Whereas the Company has been
successful in obtaining dismissals of several such suits, there is no
certainty that the Company will successfully defend the suits in the future.
No provisions have been made for possible loss from these claims.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The following discussion should be read in conjunction with the financial
statements and notes thereto found elsewhere herein. The discussion assumes
<PAGE>
that the reader is familiar with or has access to the Company's financial
statements for the year ended December 31, 1998 found in the Company's Form
10-KSB dated June 21, 1999 and 10 QSBs dated July 7, and August 13 1999.
The financial statements have been prepared on the basis of the Company
continuing as a going concern. The Company has incurred losses from
operations and negative cash flows from operating activities and has
accumulated a negative tangible net worth at September 30, 1999 in the amount
of $1,902,264. These conditions raise substantial doubt regarding the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Results of Operations
During the quarter and the nine months ended September 30, 1999 net sales
were $255,668 and $917,400 compared to $ -0- and $15,293 for the comparable
periods of the prior year. The sales amount for the nine months September 30,
1999 included sales for SoftKat in the amount of $477,011.
The costs of products sold in the quarter and nine months ended September,
1999 were $91,521 and $459,944 compared with $ -0- and $ 9,940 for the
comparable periods in the prior year.
Operating losses for the quarter and nine months ended September 30, 1999
were $2,025,856 and $6,533,658 compared to an operating loss of $819,549 and
$1,192,503 for the comparable periods in the prior year The increased
operating loss was due to the difficulties associated with Softkat operations
and increased public relations due to the Company being a public traded
company.
Stock issued for services was $308,238 and $1,622,164 for the quarter and
nine months ended September 30, 1999 and stock based compensation associated
with stock options and warrants amounted $204,000 and $2,021,347 for the same
periods..
Liquidity and Capital Resources
At September 30 1999 the Company had $734,490 of cash and a deficit in
working capital (current liabilities in excess of current assets) of
$2,555,066.
The Company had been relying upon short-term borrowings from affiliates and
others, as well as issuance of common stock and Preferred Stock
The Company estimates that during the quarter it was using approximately
$300,000 more cash each month than was generated by operations.
Risk Factors
Statements regarding the Company's plans, expectations, beliefs, intentions
as to future sales of software, future capital resources and other
forward-looking statements presented in this Form 10-QSB constitute forward
looking information within the meaning of the Private Securities Litigation
Reform Act of 1995. There can be no assurance that actual results will not
differ materially from expectations. Investors are cautioned not to ascribe
undue weight to such statements. In addition to matters affecting the
Company's industry generally, factors which could cause actual results to
differ from expectations include, but are not limited to (i) sales of the
<PAGE>
Company's software which may not rise to the level of profitability; (ii) due
to the rapidly changing and intensely competitive nature of the industry,
competitors may introduce new products with significant competitive
advantages over the Company's products; (iii) the Company may not have
sufficient resources, including any future financing it is able to obtain, to
sustain marketing and other operations; (iv) the Company may be unable to
attract and retain sufficient management and technical expertise, or may lose
key employees; (v) the Company's contractual or legal efforts to protect its
confidential information or intellectual property may be inadequate or
ineffective to provide protection, and the Company may be unable financially
to pursue legal remedies that may be available; (vi) the Company's selection,
due diligence, execution, and integration of acquisitions may not prove
effective or reasonable; (vii) the Company may suffer in material respects
from the direct or indirect effects of the "Year 2000" problem on public
utilities, telecommunications networks, customers, vendors, service
providers, and the economy or financial markets generally; (viii) the Company
may suffer from other technical or communications problems, such as power
outages, system failures, system crashes, or hacking; and (ix) the Company
may be subjected to unknown risks and uncertainties, or be unable to assess
risks and uncertainties as may exist.
PART II OTHER INFORMATION
Item 1 - Legal Proceedings
In Softkat related matter, three lawsuits against the Company, based upon a
theory of successor liability, were dismissed. Although Softkat has been sold
there may be asserted and unasserted claims against Softkat or the Company:
The Company is aware of several other creditors of Softkat, Inc., which have
claims against Softkat for amounts owed based on good and/or services
provided to Softkat. In most cases, we do not know the identity of these
creditors, the amounts that they claim are due and owing or the circumstances
of their claims. Some of the claims against Softkat have been asserted either
in pending litigation or threatened litigation.
Regarding these unasserted claims against Softkat, there is a reasonable
likelihood that some of the plaintiffs/creditors will seek to satisfy their
claims against the Company on theories of either successor liability or alter
ego.
In September, 1999, a lawsuit was filed against Intermark seeking $99,110 for
goods that were claimed to be purchased by Intermark. In October, 1999
another lawsuit was filed against Intermark seeking $81,326 for goods that
were claimed to be purchased by Intermark.
In July, 1999, a third party claim of $53,539 against Kiss was settled for
$25,000
Item 2 - Changes in Securities:
(a) The following securities were issued by the Company during the quarter
ended September 30, 1999 without registration under the Securities Act of
1933:
(i) The Company issued 105,000 shares for services valued at $168,000. The
Company issued 2,000 shares for interest totaling $6,000.
<PAGE>
The Company issued 450,000 shares in connection with the Oxford Media Corp.
acquisition.
The Company issued 262.5 shares of Series J Preferred Stock for $2,500,000.
The Company issued warrants to purchase 112,500 shares of the Company's
common stock at a price equal to approximately $3.00 and 75,000 shares at a
price equal to approximately $5.18.
In September, 1999, the Company modified previously granted warrants to an
officer to purchase 450,000 share at $0.50 per share and granted new stock
options under Employment Agreements of 390,000 shares at a price of $1.00
per share and granted an officer warrants to purchase 250,000 shares at $1.00
per share.
The Company believes the transactions were exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933.
Item 6 - Exhibits and Reports on Form 8-K
None.
(a) Exhibits.
Those exhibits previously filed with the Securities and Exchange Commission
as required by Item 601 of Regulation S-K, are incorporated herein by
reference in accordance with the provisions of Rule 12b-32.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
--------------------------------------
<S> <C>
2.1 (1) Agreement and Plan of Reorganization dated September 30, 1999
among the Company, Oxford Media Corp. and the exchanging
Security Holders of Oxford Media Corp.
10.7 Employment Agreements of Officers
Don Watters - amended
T. Richard Hutt - amended
James Budd - amended
Robert Way - amended
David P. Noyes
27 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the same number Exhibit to the Form 8-K
filed October 15, 1999 by the Company with the Securities and Exchange
Commission
(b) Reports on Form 8K
During the period covered by this report the Company filed a Form 8-K/A
On August 13, 1999 reporting on the acquisition of Kiss Software
including financial statements, under item 7.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 12, 1999
eSynch Corporation
By: /S/ Thomas Hemingway
--------------------------------------
Tom Hemingway, Chief Executive Officer
(Authorized Officer)
By: /S/ David P. Noyes
-------------------------------------
David P. Noyes, Chief Financial Officer
<PAGE>
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of March 1, 1999 is
entered into by and between eSYNCH CORPORATION, a Delaware corporation having
its principal office at 4600 Campus Drive, Newport Beach, CA 92660 (the
"Company"), and Donald C. Watters, an individual (the "Executive").
WITNESSETH
WHEREAS, the Executive and the Company desire to enter this Agreement to
confirm the terms and conditions on which the Company will employ the
Executive;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Company and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term set forth in
Section 2 below, in the position and with the duties and
responsibilities set forth in Section 3 below, and upon the other terms
and conditions hereinafter stated.
2. Term. The term of employment shall commence as of the date hereof and
shall end when terminated pursuant to Section 6 below. The period
described above shall be hereinafter referred to as the "Term of
Employment."
3. Position, Duties, Responsibilities and Authority.
(a) During the Term of Employment, the Executive shall serve as
President and Chief Operating Officer of the Company, and shall report
and be responsible to the Chief Executive Officer and the Board of
Directors of the Company. During the Term of Employment, the Executive
shall have the duties, responsibilities and authority as shall be
determined from time to time by the Chief Executive Officer and the
Board of Directors of the Company.
(b) Throughout the Term of Employment, the Executive shall devote his
full business time and attention to the business of the
<PAGE>
Company.
4. Base Compensation. During the Term of Employment, the Executive shall
receive base compensation at an annual rate of not less than One Hundred
Fifty Thousand Dollars ($150,000), to be paid in accordance with the
Company's normal procedure for compensation of its senior executives,
but not less frequently than monthly. At the end of each calendar year
during the Term of Employment, the Executive's base compensation shall
be reviewed by the Board of Directors of the Company, on the basis of
the performance of the Executive and the profitability of the Company.
5. Employee Benefits, Perquisites and Expenses. During the Term of
Employment, the Executive shall be entitled to participate in all
benefit plans, programs or practices maintained by the Company for
senior executives or other employees of the Company on the date hereof
and any other such benefit plans, programs or practices from time to
time in effect, subject to the terms thereof. Without limiting the
generality of the foregoing, the Executive shall be entitled to the
following:
(a) The company hereby grants the executive (450,000) four-hundred and
fifty thousand shares of eSYNCH stock at a purchase price of
($0.50) fifty cents per share and (250,000) shares of eSYNCH
company options that are immediately vested at a exercise price of
$1.00 per share as of 1/10/99.
(b) Three (3) weeks of paid vacation in each calendar year during the
Term of Employment subject to the accrual policies of the Company
currently in effect or hereafter approved by the Company's Board
of Directors; plus such holidays, sick leave and other time off as
are established by the policies of the Company currently in effect
or hereafter approved by the Company's Board of Directors;
(c) Reimbursement for all reasonable and documented expenses incurred
by the Executive in connection with the performance of his duties
hereunder, all in accordance with the Company's policy with
respect to such reimbursement;
(d) Medical, dental and other supplemental health benefits, life
insurance benefits for the Executive and his dependents,
accidental death and dismemberment benefits for the Executive, and
long-term disability benefits, at least as favorable to the
Executive as those currently in effect;
(e) Participation in the Company's 401(k) plan, and related matching
program as currently in effect;
(f) Payment of personal tax planning and preparation expenses up to a
maximum of Fifteen Hundred Dollars ($1,500) per year;
(g) A reasonable car allowance or a company car of the make and type
approved by the Board of Directors of the Company but not less
than $500 a month.
6. Termination of Employment. The Term of Employment shall terminate upon
the occurrence of any of the following events:
<PAGE>
(a) The Executive may terminate his employment upon giving the Company
written notice thirty (30) days in advance of the proposed date of
termination.
(b) The Executive's employment shall terminate automatically upon the
death of Executive.
(c) The Company may terminate the Executive's employment at any time
for cause by delivering to the Executive a certified copy of a
resolution of the Board of Directors of the Company finding that
the Executive committed an act or omission constituting cause
hereunder. As used herein, the term "cause" shall mean:
(i) Misappropriation of any material funds or property of the
Company, or any act or acts of intentional dishonesty relating to
the Executive's employment resulting or intended to result in
direct or indirect personal gain or enrichment at the expense of
the Company;
(ii) Acting in a manner which is substantially detrimental or
substantially damaging to the Company's reputation, business
operations, prospects or relations with its employees, suppliers
or customers, after receipt of written notice thereof from the
Board of Directors of the Company and a reasonable opportunity to
so remedy such acts; or
(iii) Refusing to perform in material respects his duties
hereunder (other than as a result of any temporary or permanent
mental or physical impairment as certified by a physician
reasonably acceptable to the Company), after receipt of written
notice thereof from the Board of Directors of the Company and a
reasonable opportunity to so perform such duties.
(d) However, notwithstanding any of the above, the Company may
terminate the Executive's employment without cause at any time and
for any reason by giving the Executive written notice (in
accordance with the notice provisions contained in Section 9) from
the Board of Directors of the Company at least thirty (30) days in
advance of the date on which the termination is to become
effective.
7. Obligations and Payments Upon Termination.
(a) Upon any termination of employment pursuant to Section 6, the
Executive and the Company shall have no further obligation to the
other under this Agreement except with respect to the provisions
of this Section 7.
(b) Upon any termination of employment under Sections 6(a), 6(b) or
6(c), the Company shall pay the Executive in a lump sum within ten
(10) days following such termination (or such earlier date
required by law) an amount equal to the pro-rata amount of the
base compensation owed to the Executive as of the effective date
of the termination (as well as any accrued but unpaid vacation) as
he may be entitled to receive up to the date of termination.
<PAGE>
(c) Upon any termination of employment under Section 6(d), the Company
shall make payment to the Executive in the amounts and at the
times set forth in Section 7(b); and, in addition:
(i) the Company shall pay the Executive in a lump sum within ten
(10) days following such termination an additional amount
equal to twelve (12) months of his base compensation;
(ii) the Company shall continue to provide to the Executive the
employee benefits, perquisites and expenses identified in
Section 5(c) through 5(f) hereof for the twelve (12) month
period following the date of termination;
(iii) the Company shall repay all loans and other obligations
payable to the Executive in cash within ten (10) days
following such termination; and
(iv) the Company shall repurchase from the Executive all shares of
capital stock, options and warrants of the Company held by
him or his affiliates at the current 30 day average market
trading price prior to the date of delivery notice of the
Executives termination in a lump sum in cash within ten (10)
days following the effective date of termination.
(d) Provided that the Company repurchases all shares of capital stock,
options and warrants of the Company held by the Executive or his
affiliates pursuant to the this agreement (whether such repurchase
occurs as a result of termination without cause or termination for
any other reason) and, to the extent applicable, in accordance
with Section 7(c)(iv) of this Agreement, the Executive hereby
agrees that, from and after the date on which the closing of such
repurchase occurs and continuing for a period of two (2) years
thereafter, he will not, directly or indirectly, engage in any
business, or have any interest in, any corporation, partnership,
proprietorship, firm, Association or business, which engages in
any activities competitive with the products being licensed or
sold by the Company or solicit and/or recruit the company's
customers, suppliers, or personnel at the time of such repurchase.
This covenant shall apply in each jurisdiction in which the
Company licenses or sells any products at the time of such
repurchase. Notwithstanding the foregoing, this covenant shall not
restrict the ability of the Executive to own up to 5% of the
shares of capital stock of any public company.
8. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Directors of the Company and is
agreed to in writing, signed by the Executive and by an officer of the
Company (other than the Executive) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any
party hereto of any breach by any other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or
a waiver of a similar or dissimilar provision or
<PAGE>
condition at the same or at any prior or subsequent time; nor shall the
receipt or acceptance of compensation or other benefits following any
termination of the Executive's employment be deemed a waiver of any
condition or provision hereof.
9. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
10. CHOICE OF LAW. The formation, construction and performance of this
agreement shall be construed in accordance with the laws of California.
11. INTEGRATION. This Agreement contains the entire agreement between the
parties and supercedes all prior oral and written agreements,
understandings, commitments and practices between them, including all
prior employment agreements, whether or not fully performed by Executive
before the date of this Agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement.
12. VENUE. Any action brought to enforce the terms of this agreement shall
be commenced, prosecuted and defended exclusively in the State or
Federal court of the State of California located in Orange County,
California.
13. ATTORNEY'S FEES. In the event of any legal action (including any appeal
of a judgement) in connection with the Agreement, the prevailing party
shall be entitled to reimbursement of reasonable attorneys' fees and
costs and expenses (including court costs) incurred in connection there
with.
IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer of the Company, have executed this Employment Agreement as of the
first day of March, 1999
COMPANY
eSYNCH CORPORATION (Board of Directors)
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
EXECUTIVE
---------------------------------------
Donald C Watters, an individual
<PAGE>
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April 1, 1999
is entered into by and between eSYNCH CORPORATION, a Delaware
corporation having its principal office at 4600 Campus Drive, Newport
Beach, CA 92660 (the "Company"), and Dick Hutt, an individual (the
"Executive").
WITNESSETH
WHEREAS, the Executive and the and the Company desire to enter this
Agreement to confirm the terms and conditions on which the Company will
employ the Executive;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Company and the
Executive agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term set forth in
Section 2 below, in the position and with the duties and
responsibilities set forth in Section 3 below, and upon the other terms
and conditions hereinafter stated.
2. Term. The term of employment shall commence as of the date hereof and
shall end when terminated pursuant to Section 6 below. The period
described above shall be hereinafter referred to as the "Term of
Employment."
3. Position, Duties, Responsibilities and Authority.
(a) During the Term of Employment, the Executive shall serve as
Vice-President and Corporate Secretary of the Company, and shall
report and be responsible to the Chief Executive Officer of the
Company. During the Term of Employment, the Executive shall have the
duties, responsibilities and authority as shall be determined from
time to time by the Chief Executive Officer of the Company.
(b) Throughout the Term of Employment, the Executive shall devote his
full business time and attention to the business of the Company.
<PAGE>
4. Base Compensation. During the Term of Employment, the Executive shall
receive base compensation at an annual rate of not less than One Hundred
thirty Thousand Dollars ($130,000), to be paid in accordance with the
Company's normal procedure for compensation of its senior executives,
but not less frequently than monthly. At the end of each calendar year
during the Term of Employment, the Executive's base compensation shall
be reviewed by the Board of Directors of the Company, on the basis of
the performance of the Executive and the profitability of the Company.
5. Employee Benefits, Perquisites and Expenses. During the Term of
Employment, the Executive shall be entitled to participate in all
benefit plans, programs or practices maintained by the Company for
senior executives or other employees of the Company on the date hereof
and any other such benefit plans, programs or practices from time to
time in effect, subject to the terms thereof. Without limiting the
generality of the foregoing, the Executive shall be entitled to the
following:
(a) Options in conjunction with former option agreement.
(b) Two (2) weeks of paid vacation in each calendar year during the
Term of Employment subject to the accrual policies of the Company
currently in effect or hereafter approved by the Company's Board
of Directors; plus such holidays, sick leave and other time off as
are established by the policies of the Company currently in effect
or hereafter approved by the Company's Board of Directors;
(c) Reimbursement for all reasonable and documented expenses incurred
by the Executive in connection with the performance of his duties
hereunder, all in accordance with the Company's policy with
respect to such reimbursement;
(d) Medical, dental and other supplemental health benefits, life
insurance benefits for the Executive and his dependents,
accidental death and dismemberment benefits for the Executive, and
long-term disability benefits, at least as favorable to the
Executive as those currently in effect;
(e) Participation in the Company's 401(k) plan, and related matching
program as currently in effect;
6. Termination of Employment. The Term of Employment shall terminate upon the
occurrence of any of the following events:
(a) The Executive may terminate his employment upon giving the Company
written notice thirty (30) days in advance of the proposed date of
termination.
(b) The Executive's employment shall terminate automatically upon the
death of Executive.
(c) The Company may terminate the Executive's employment at any time
for cause by delivering to the Executive a letter finding that the
Executive committed an act or omission constituting
<PAGE>
cause hereunder. As used herein, the term "cause" shall mean:
(i) Misappropriation of any material funds or property of the
Company, or any act or acts of intentional dishonesty
relating to the Executive's employment resulting or intended
to result in direct or indirect personal gain or enrichment
at the expense of the Company;
(ii) Acting in a manner which is substantially detrimental or
substantially damaging to the Company's reputation, business
operations, prospects or relations with its employees,
suppliers or customers, after receipt of written notice
thereof from the President/COO and a reasonable opportunity
to so remedy such acts; or
(iii) Willfully refusing to perform in material respects his duties
hereunder (other than as a result of any temporary or
permanent mental or physical impairment as certified by a
physician reasonably acceptable to the Company), after
receipt of written notice thereof from the President/COO of
the Company and a reasonable opportunity to so perform such
duties.
(d) The Company may terminate the Executive's employment without cause
at any time and for any reason by giving the Executive written
notice from the President/COO of the Company at least thirty (30)
days in advance of the date on which the termination is to become
effective.
7. Obligations and Payments Upon Termination.
(a) Upon any termination of employment pursuant to Section 6, the
Executive and the Company shall have no further obligation to the
other under this Agreement except with respect to the provisions
of this Section 7.
(b) Upon any termination of employment under Sections 6(a), 6(b) or
6(c), the Company shall pay the Executive in a lump sum within ten
(10) days following such termination (or such earlier date
required by law) an amount equal to the base compensation provided
under section 4 hereof (as well as any accrued but unpaid
vacation) as he may be entitled to receive up to the date of
termination.
(c) Upon any termination of employment under Section 6(d), the Company
shall make payment to the Executive in the amounts and at the
times set forth in Section 7(b); and, in addition:
(i) The Company shall pay the Executive in a lump sum within ten
(10) days following such termination an additional amount equal to
three (3) months of his base compensation;
(ii) The Company shall continue to provide to the Executive the
employee benefits, perquisites and expenses identified in Section
5(c) through 5(f) hereof for the three (3) month period following
the date of termination;
<PAGE>
(iii) The Company shall repay all loans and other obligations
payable to the Executive in cash within ten (10) days following
such termination; and
(iv) The Company shall immediately vest all shares of stock
options and warrants of the Company held by the executive and the
company has the right at the companies option to buy back from the
executive any shares of stock, options and warrants held by the
executive at the current 30 day average market trading price prior
to the date of delivery of the Executive's termination.
(v) The executive has three (3) months from the termination date
in which to exercise these options and/or warrants or they expire.
(d) Provided that the Company repurchases all shares of capital stock,
options and warrants of the Company held by the Executive or his
affiliates pursuant to the this agreement (whether such repurchase
occurs as a result of termination without cause or termination for
any other reason) and, to the extent applicable, in accordance
with Section 7(c)(iv) of this Agreement, the Executive hereby
agrees that, from and after the date on which the closing of such
repurchase occurs and continuing for a period of two (2) years
thereafter, he will not, directly or indirectly, engage in any
business, or have any interest in, any corporation, partnership,
proprietorship, firm, Association or business, which engages in
any activities competitive with the products being licensed or
sold by the Company or solicit and/or recruit the company's
customers, suppliers, or personnel at the time of such repurchase.
This covenant shall apply in each jurisdiction in which the
Company licenses or sells any products at the time of such
repurchase. Notwithstanding the foregoing, this covenant shall not
restrict the ability of the Executive to own up to 5% of the
shares of capital stock of any public company.
8. AMENDMENT OR MODIFICATION; Waiver. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Directors of the Company and is
agreed to in writing, signed by the Executive and by an officer of the
Company (other than the Executive) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any
party hereto of any breach by any other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or
a waiver of a similar or dissimilar provision or condition at the same
or at any prior or subsequent time; nor shall the receipt or acceptance
of compensation or other benefits following any termination of the
Executive's employment be deemed a waiver of any condition or provision
hereof.
9. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
<PAGE>
10. CHOICE OF LAW. The formation, construction and performance of this
agreement shall be construed in accordance with the laws of California.
11. INTEGRATION. This Agreement contains the entire agreement between the
parties and supercedes all prior oral and written agreements,
understandings, commitments and practices between them, including all
prior employment agreements, whether or not fully performed by Executive
before the date of this Agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement.
12. VENUE. Any action brought to enforce the terms of this agreement shall
be commenced, prosecuted and defended exclusively in the State or
Federal court of the State of California located in Orange County,
California.
13. ATTORNEY'S FEES. In the event of any legal action (including any appeal
of a judgement) in connection with the Agreement, the prevailing party
shall be entitled to reimbursement of reasonable attorneys' fees and
costs and expenses (including court costs) incurred in connection there
with.
IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer of the Company, have executed this Employment Agreement as of the
first day of April 1999
COMPANY
eSYNCH CORPORATION (Board of Directors)
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
EXECUTIVE
---------------------------------------
Dick Hutt, an individual
<PAGE>
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April 1, 1999
is entered into by and between eSYNCH CORPORATION, a Delaware
corporation having its principal office at 4600 Campus Drive, Newport
Beach, CA 92660 (the "Company"), and Jim Budd, an individual (the
"Executive").
WlTNESSETH
WHEREAS, the Executive and the and the Company desire to enter this
Agreement to confirm the terms and conditions on which the Company will
employ the Executive;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Company and the
Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term set forth in
Section 2 below, in the position and with the duties and
responsibilities set forth in Section 3 below, and upon the other terms
and conditions hereinafter stated.
2. TERM. The term of employment shall commence as of the date hereof and
shall end when terminated pursuant to Section 6 below. The period
described above shall be hereinafter referred to as the "Term of
Employment."
3. POSITION, DUTIES, RESPONSIBILITIES AND AUTHORITY.
(a) During the Term of Employment, the Executive shall serve as
Vice-President and shall report and be responsible to the President and
COO of the Company. During the Term of Employment, the Executive shall
have the duties, responsibilities and authority as shall be determined
from time to time by the President and COO of the Company.
(b) Throughout the Term of Employment, the Executive shall devote his
full business time and attention to the business of the Company.
4. BASE COMPENSATION. During the Term of Employment, the Executive shall
receive base compensation at an annual rate of not less than One Hundred
Thirty Thousand Dollars ($130,000), to be paid in accordance with
<PAGE>
the Company's normal procedure for compensation of its senior
executives, but not less frequently than monthly. At the end of each
calendar year during the Term of Employment, the Executive's base
compensation shall be reviewed by the Board of Directors of the Company,
on the basis of the performance of the Executive and the profitability
of the Company.
5. EMPLOYEE BENEFITS, PERQUISITES AND EQPENSES. During the Term of
Employment, the Executive shall be entitled to participate in all
benefit plans, programs or practices maintained by the Company for
senior executives or other employees of the Company on the date hereof
and any other such benefit plans, programs or practices from time to
time in effect, subject to the terms thereof. Without limiting the
generality of the foregoing, the Executive shall be entitled to the
following:
(a) Options in conjunction with former option agreement.
(b) Two (2) weeks of paid vacation in each calendar year during the
Term of Employment subject to the accrual policies of the Company
currently in effect or hereafter approved by the Company's Board
of Directors; plus such holidays, sick leave and other time off as
are established by the policies of the Company currently in effect
or hereafter approved by the Company's Board of Directors;
(c) Reimbursement for all reasonable and documented expenses incurred
by the Executive in connection with the performance of his duties
hereunder, all in accordance with the Company's policy with
respect to such reimbursement;
(d) Medical, dental and other supplemental health benefits, life
insurance benefits for the Executive and his dependents,
accidental death and dismemberment benefits for the Executive, and
long-term disability benefits, at least as favorable to the
Executive as those currently in effect;
(e) Participation in the Company's 401(k) plan, and related matching
program as currently in effect;
6. TERMINATION OF EMPLOYMNET. The Term of Employment shall terminate upon
the occurrence of any of the following events:
(a) The Executive may terminate his employment upon giving the Company
written notice thirty (30) days in advance of the proposed date of
termination.
(b) The Executive's employment shall terminate automatically upon the
death of Executive.
(c) The Company may terminate the Executive's employment at any time
for cause by delivering to the Executive a letter finding that the
Executive committed an act or omission constituting cause
hereunder. As used herein, the term "cause" shall mean:
(i) Misappropriation of any material funds or property of the
Company, or any act or acts of intentional dishonesty
<PAGE>
relating to the Executive's employment resulting or intended to
result in direct or indirect personal gain or enrichment at the
expense of the Company;
(ii) Acting in a manner which is substantially detrimental or
substantially damaging to the Company's reputation, business
operations, prospects or relations with its employees, suppliers
or customers, after receipt of written notice thereof from the
President/COO and a reasonable opportunity to so remedy such acts;
or
(iii) Willfully refusing to perform in material respects his
duties hereunder (other than as a result of any temporary or
permanent mental or physical impairment as certified by a
physician reasonably acceptable to the Company), after receipt of
written notice thereof from the President/COO of the Company and a
reasonable opportunity to so perform such duties.
(d) The Company may terminate the Executive's employment without cause
at any time and for any reason by giving the Executive written
notice from the President/COO of the Company at least thirty (30)
days in advance of the date on which the termination is to become
effective.
7. OBLIGATIONS AND PAYMENTS UPON TERMINATION
(a) Upon any termination of employment pursuant to Section 6, the
Executive and the Company shall have no further obligation to the
other under this Agreement except with respect to the provisions
of this Section 7.
(b) Upon any termination of employment under Sections 6(a), 6(b) or
6(c), the Company shall pay the Executive in a lump sum within ten
(10) days following such termination (or such earlier date
required by law) an amount equal to the base compensation provided
under section 4 hereof(as well as any accrued but unpaid vacation)
as he may be entitled to receive up to the date of termination.
(c) Upon any termination of employment under Section 6(d), the
Company shall make payment to the Executive in the amounts and at
the times set forth in Section 7(b); and, in addition:
(i) The Company shall pay the Executive in a lump sum within ten
(10) days following such termination an additional amount equal to
three (3) months of his base compensation;
(ii) The Company shall continue to provide to the Executive the
employee benefits, perquisites and expenses identified in Section
5(c) through 5(f) hereof for the three (3) month period following
the date of termination;
(iii) The Company shall repay all loans and other obligations
payable to the Executive in cash within ten (10) days following
such termination; and
(iv) The Company shall immediately vest all shares of stock
<PAGE>
options and warrants of the Company held by the executive and the
company has the right at the companies option to buy back from the
executive any shares of stock, options and warrants held by the
executive at the current 30 day average market trading price prior
to the date of delivery of the Executive's termination.
(v) The executive has three (3) months from the termination date
in which to exercise these options and/or warrants or they expire.
(d) Provided that the Company repurchases all shares of capital stock,
options and warrants of the Company held by the Executive or his
affiliates pursuant to the this agreement (whether such repurchase
occurs as a result of termination without cause or termination for
any other reason) and, to the extent applicable, in accordance
with Section 7(c)(iv) of this Agreement, the Executive hereby
agrees that, from and after the date on which the closing of such
repurchase occurs and continuing for a period of two (2) years
thereafter, he will not, directly or indirectly, engage in any
business, or have any interest in, any corporation, partnership,
proprietorship, firm, Association or business, which engages in
any activities competitive with the products being licensed or
sold by the Company or solicit and/or recruit the company's
customers, suppliers, or personnel at the time of such repurchase.
This covenant shall apply in each jurisdiction in which the
Company licenses or sells any products at the time of such
repurchase. Notwithstanding the foregoing, this covenant shall not
restrict the ability of the Executive to own up to 5% of the
shares of capital stock of any public company.
8. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may
be amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Directors of the Company and is
agreed to in writing, signed by the Executive and by an officer of the
Company (other than the Executive) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any
party hereto of any breach by any other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or
a waiver of a similar or dissimilar provision or condition at the same
or at any prior or subsequent time; nor shall the receipt or acceptance
of compensation or other benefits following any termination of the
Executive's employment be deemed a waiver of any condition or provision
hereof.
9. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
10. CHOICE OF LAW. The formation, construction and performance of this
agreement shall be construed in accordance with the laws of California.
11. INTEGRATION. This Agreement contains the entire agreement between the
<PAGE>
parties and supercedes all prior oral and written agreements,
understandings, commitments and practices between them, including all
prior employment agreements, whether or not fully performed by Executive
before the date of this Agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement.
12. VENUE. Any action brought to enforce the terms of this agreement shall
be commenced, prosecuted and defended exclusively in the State or
Federal court of the State of California located in Orange County,
California.
13. ATTORNEY'S FEES. In the event of any legal action (including any appeal
of a judgement) in connection with the Agreement, the prevailing party
shall be entitled to Reimbursement of reasonable attorneys' fees and
costs and expenses (including court costs) incurred in connection there
with.
IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer of the Company, have executed this Employment Agreement as of
the first day of April 1999
COMPANY
eSYNCH CORPORATION (Board of Directors)
By
---------------------------------------
By
---------------------------------------
By
-----------------------------------------
EXECUTIVE
-----------------------------------------
Jim Budd, an individual
<PAGE>
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of April 1, 1999
is entered into by and between eSYNCH CORPORATION, a Delaware
corporation having its principal office at 4600 Campus Drive, Newport
Beach, CA 92660 (the "Company"), and Robert Way, an individual (the
"Executive").
WITNESSETH
WHEREAS, the Executive and the and the Company desire to enter this
Agreement to confirm the terms and conditions on which the Company will
employ the Executive;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the Company and the
Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term set forth in
Section 2 below, in the position and with the duties and responsibilities
set forth in Section 3 below, and upon the other terms and conditions
hereinafter stated.
2. TERM. The term of employment shall commence as of the date hereof and
shall end when terminated pursuant to Section 6 below. The period
described above shall be hereinafter referred to as the "Term of
Employment."
3. POSITION, DUTIES, RESPONSIBILITIES AND AUTHORITY
(a) During the Term of Employment, the Executive shall serve as
Vice-President and General Manager of the Company, and shall report and
be responsible to the President and Chief Operating Officer of the
Company. During the Term of Employment, the Executive shall have the
duties, responsibilities and authority as shall be determined from time
to time by the President and Chief Operating Officer of the Company.
(b) Throughout the Term of Employment, the Executive shall devote his
full business time and attention to the business of the Company.
4. BASE COMPENSATION. During the Term of Employment, the Executive shall
receive base compensation at an annual rate of not less than One
<PAGE>
Hundred Ten Thousand Dollars ($110,000), to be paid in accordance with
the Company's normal procedure for compensation of its senior
executives, but not less frequently than monthly. At the end of each
calendar year during the Term of Employment, the Executive's base
compensation shall be reviewed by the Board of Directors of the Company,
on the basis of the performance of the Executive and the profitability
of the Company.
5. EMPLOYEE BENEFITS, PEREQUSITIES AND EXPENSES During the Term of
Employment, the Executive shall be entitled to participate in all
benefit plans, programs or practices maintained by the Company for
senior executives or other employees of the Company on the date hereof
and any other such benefit plans, programs or practices from time to
time in effect, subject to the terms thereof. Without limiting the
generality of the foregoing, the Executive shall be entitled to the
following:
(a) The company hereby grants the executive(250,000) Two Hundred and
Fifty thousand shares of eSYNCH options that are immediately
vested at a exercise price of $1.00 per share as of 1/10/99
(b) Three (3) weeks of paid vacation in each calendar year during the
Term of Employment subject to the accrual policies of the Company
currently in effect or hereafter approved by the Company's Board
of Directors; plus such holidays, sick leave and other time off as
are established by the policies of the Company currently in effect
or hereafter approved by the Company's Board of Directors;
(c) Reimbursement for all reasonable and documented expenses incurred
by the Executive in connection with the performance of his duties
hereunder, all in accordance with the Company's policy with
respect to such reimbursement;
(d) Medical, dental and other supplemental health benefits, life
insurance benefits for the Executive and his dependents,
accidental death and dismemberment benefits for the Executive, and
long-term disability Benefits, at least as favorable to the
Executive as those currently in effect;
(e) Participation in the Company's 401(k) plan, and related matching
program as currently in effect;
6. Termination of Employment. The Term of Employment shall terminate upon the
occurrence of any of the following events:
(a) The Executive may terminate his employment upon giving the Company
written notice thirty (30) days in advance of the proposed date of
termination.
(b) The Executive's employment shall terminate automatically upon the
death of Executive.
(c) The Company may terminate the Executive's employment at any time
for cause by delivering to the Executive a letter finding that the
executive committed an act or omission constituting cause
hereunder. As used herein, the term "cause" shall mean:
<PAGE>
(i) Misappropriation of any material funds or property of the
Company, or any act or acts of intentional dishonesty relating to
the Executive's employment resulting or intended to result in
direct or indirect personal gain or enrichment at the expense of
the Company;
(ii) Acting in a manner which is substantially detrimental or
substantially damaging to the Company's reputation, business
operations, prospects or relations with its employees, suppliers
or customers, after receipt of written notice thereof from the
President/COO and a reasonable opportunity to so remedy such acts;
or
(iii) Willfully refusing to perform in material respects his
duties hereunder (other than as a result of any temporary or
permanent mental or physical impairment as certified by a
physician reasonably acceptable to the Company), after receipt of
written notice thereof from the President/COO of the Company and a
reasonable opportunity to so perform such duties.
(d) The Company may terminate the Executive's employment without cause
at any time and for any reason by giving the Executive written
notice from the President/COO of the Company at least thirty (30)
days in advance of the date on which the termination is to become
effective.
7. OBLIGATIONS AND PAYMENTS UPON TERMINATION.
(a) Upon any termination of employment pursuant to Section 6, the
Executive and the Company shall have no further obligation to the
other under this Agreement except with respect to the provisions
of this Section 7.
(b) Upon any termination of employment under Sections 6(a), 6(b) or
6(c), the Company shall pay the Executive in a lump sum within ten
(10) days following such termination (or such earlier date
required by law) an amount equal to the base compensation provided
under section 4 hereof(as well as any accrued but unpaid vacation)
as he may be Entitled to receive up to the date of termination.
(c) Upon any termination of employment under Section 6(d), the Company
shall make payment to the Executive in the amounts and at the
times set forth in Section 7(b); and, in addition:
(i) The Company shall pay the Executive in a lump sum within ten
(10) days following such termination an additional amount
equal to three (3) months of his base compensation;
(ii) The Company shall continue to provide to the Executive the
employee benefits, perquisites and expenses identified in
Section 5(c) through 5(f) hereof for the three (3) month
period following the date of termination;
(iii) The Company shall repay all loans and other obligations
payable to the Executive in cash within ten (10) days
<PAGE>
following such termination; and
(iv) The Company shall immediately vest all shares of stock
options and warrants of the Company held by the executive and
the company has the right at the companies option to buy back
from the executive any shares of stock, options and warrants
held by the executive at the current 30 day average market
trading price prior to the date of delivery of the
Executive's termination.
(v) The executive has three (3) months from the termination date
in which to exercise these options and/or warrants or they
expire.
(d) Provided that the Company repurchases all shares of capital stock,
options and warrants of the Company held by the Executive pursuant
to the this agreement (whether such repurchase occurs as a result
of termination without cause or termination for any other reason)
and, to the extent applicable, in accordance with Section 7(c)(iv)
of this Agreement, the Executive hereby agrees that, from and
after the date on which the closing of such repurchase occurs and
continuing for a period of two years thereafter, he will not,
directly or indirectly, engage in any business, or have any
interest in, any corporation, partnership, proprietorship, firm,
Association or business, which engages in any activities
competitive with the products being licensed or sold by the
Company at the time of such repurchase. This covenant shall apply
in each jurisdiction in which the Company licenses or sells any
products at the time of such repurchase. Notwithstanding the
foregoing, this covenant shall not restrict the ability of the
Executive to own up to 5% of the shares of capital stock of any
public company.
8. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement
may be amended, modified or waived unless such amendment, modification
or waiver is authorized by the Board of Directors of the Company and is
agreed to in writing, signed by the Executive and by an officer of the
Company (other than the Executive) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any
party hereto of any breach by any other party hereto of any condition
or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a subsequent breach of such condition or
provision or a waiver of a similar or dissimilar provision or condition
at the same or at any prior or subsequent time; nor shall the receipt
or acceptance of compensation or other benefits following any
termination of the Executive's employment be deemed a waiver of any
condition or provision hereof.
9. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
10. CHOICE OF LAW. The formation, construction and performance of this
agreement shall be construed in accordance with the laws of California.
<PAGE>
11. INTEGRATION. This Agreement contains the entire agreement between the
parties and supercedes all prior oral and written agreements,
understandings, commitments and practices between them, including all
prior employment agreements, whether or not fully performed by Executive
before the date of this Agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement.
12. VENUE. Any action brought to enforce the terms of this agreement shall be
commenced, prosecuted and defended exclusively in the State or Federal
court of the State of California located in Orange County, California.
13. ATTORNEY'S FEES. In the event of any legal action (including any appeal
of a judgement) in connection with the Agreement, the prevailing party
shall be entitled to reimbursement of reasonable attorneys' fees and
costs and expenses (including court costs) incurred in connection there
with.
IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer of the Company, have executed this Employment Agreement as of
the first day of April 1999
COMPANY
eSYNCH CORPORATION (Board of Directors)
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
EXECUTIVE
---------------------------------------
Robert Way, an individual
<PAGE>
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of September 8, 1999
is entered into by and between eSYNCH CORPORATION, a Delaware corporation
having its principal office at 15502 Mosher, Tustin, CA (the "Company"), and
David P. Noyes an individual (the "Executive").
WITNESSETH
WHEREAS, the Executive and the Company desire to enter this Agreement to
confirm the terms and conditions on which the Company will employ the
Executive;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Company and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive, and the Executive
hereby accepts employment with the Company, for the term set forth in
Section 2 below, in the position and with the duties and
responsibilities set forth in Section 3 below, and upon the other terms
and conditions hereinafter stated.
2. Term. The term of employment shall commence as of the date hereof and
shall end when terminated pursuant to Section 6 below. The period
described above shall be hereinafter referred to as the "Term of
Employment."
3. Position, Duties, Responsibilities and Authority.
(a) During the Term of Employment, the Executive shall serve as Chief
Financial Officer of the Company, and shall report and be responsible to
the Chief Executive Officer and the Board of Directors of the Company.
During the Term of Employment, the Executive shall have the duties,
responsibilities and authority as shall be determined from time to time
by the Chief Executive Officer and the Board of Directors of the Company.
(b) Throughout the Term of Employment, the Executive shall devote his
full business time and attention to the business of the Company.
4. Base Compensation. During the Term of Employment, the Executive shall
receive base compensation at an annual rate of not less than One
<PAGE>
Hundred Fifty Thousand Dollars ($150,000), to be paid in accordance with
the Company's normal procedure for compensation of its senior
executives, but not less frequently than monthly. At the end of each
calendar year during the Term of Employment, the Executive's base
compensation shall be reviewed by the Board of Directors of the Company,
on the basis of the performance of the Executive and the profitability
of the Company.
5. Employee Benefits, Perquisites and Expenses. During the Term of
Employment, the Executive shall be entitled to participate in all
benefit plans, programs or practices maintained by the Company for
senior executives or other employees of the Company on the date hereof
and any other such benefit plans, programs or practices from time to
time in effect, subject to the terms thereof. Without limiting the
generality of the foregoing, the Executive shall be entitled to the
following:
(a) The company hereby grants the executive (250,000) two hundred and
fifty thousand shares of eSYNCH stock at a purchase price of
($1.00) one dollar per share and (250,000) shares of eSYNCH
company options that are vested quarterly in the amount of 31,250
per quarter at a exercise price of $1.00 per share as of 9/08/99.
(b) Three (3) weeks of paid vacation in each calendar year during the
Term of Employment subject to the accrual policies of the Company
currently in effect or hereafter approved by the Company's Board
of Directors; plus such holidays, sick leave and other time off as
are established by the policies of the Company currently in effect
or hereafter approved by the Company's Board of Directors;
(c) Reimbursement for all reasonable and documented expenses incurred
by the Executive in connection with the performance of his duties
hereunder, all in accordance with the Company's policy with
respect to such reimbursement;
(d) Medical, dental and other supplemental health benefits, life
insurance benefits for the Executive and his dependents,
accidental death and dismemberment benefits for the Executive, and
long-term disability benefits, at least as favorable to the
Executive as those currently in effect;
(e) Participation in the Company's 401(k) plan, and related matching
program as currently in effect;
(f) Payment of personal tax planning and preparation expenses up to a
maximum of Fifteen Hundred Dollars ($1,000) per year;
(g) A reasonable car allowance or a company car of the make and type
approved by the Board of Directors of the Company but not less
than $500 a month.
6. Termination of Employment. The Term of Employment shall terminate upon
the occurrence of any of the following events:
(a) The Executive may terminate his employment upon giving the Company
written notice thirty (30) days in advance of the proposed
<PAGE>
date of termination.
(b) The Executive's employment shall terminate automatically upon the
death of Executive.
(c) The Company may terminate the Executive's employment at any time
for cause by delivering to the Executive a certified copy of a
resolution of the Board of Directors of the Company finding that
the Executive committed an act or omission constituting cause
hereunder. As used herein, the term "cause" shall mean:
(i) Misappropriation of any material funds or property of the
Company, or any act or acts of intentional dishonesty relating to
the Executive's employment resulting or intended to result in
direct or indirect personal gain or enrichment at the expense of
the Company;
(ii) Acting in a manner which is substantially detrimental or
substantially damaging to the Company's reputation, business
operations, prospects or relations with its employees, suppliers
or customers, after receipt of written notice thereof from the
Board of Directors of the Company and a reasonable opportunity to
so remedy such acts; or
(iii) Refusing to perform in material respects his duties
hereunder (other than as a result of any temporary or permanent
mental or physical impairment as certified by a physician
reasonably acceptable to the Company), after receipt of written
notice thereof from the Board of Directors of the Company and a
reasonable opportunity to so perform such duties.
(d) However, notwithstanding any of the above, the Company may
terminate the Executive's employment without cause at any time and
for any reason by giving the Executive written notice (in
accordance with the notice provisions contained in Section 9) from
the Board of Directors of the Company at least thirty (30) days in
advance of the date on which the termination is to become
effective.
7. Obligations and Payments Upon Termination.
(a) Upon any termination of employment pursuant to Section 6, the
Executive and the Company shall have no further obligation to the
other under this Agreement except with respect to the provisions
of this Section 7.
(b) Upon any termination of employment under Sections 6(a), 6(b) 6(c)
or 6 (d), the Company shall pay the Executive in a lump sum within
ten (10) days following such termination (or such earlier date
required by law) an amount equal to the pro-rata amount of the
base compensation owed to the Executive as of the effective date
of the termination (as well as any accrued but unpaid vacation) as
he may be entitled to receive up to the date of termination.
(c) Upon any termination of employment under Section 6(d), the Company
shall make payment to the Executive in the amounts and
<PAGE>
at the times set forth in Section 7(b); and, in addition:
(i) the Company shall pay the Executive in a lump sum within ten
(10) days following such termination an additional amount
equal to six (6) months of his base compensation;
(ii) the Company shall continue to provide to the Executive the
employee benefits, perquisites and expenses identified in
Section 5(c) through 5(f) hereof for the six (6) month period
following the date of termination;
(iii) the Company shall repay all loans and other obligations
payable to the Executive in cash within ten (10) days
following such termination.
8. AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may be
amended, modified or waived unless such amendment, modification or
waiver is authorized by the Board of Directors of the Company and is
agreed to in writing, signed by the Executive and by an officer of the
Company (other than the Executive) thereunto duly authorized. Except as
otherwise specifically provided in this Agreement, no waiver by any
party hereto of any breach by any other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of a subsequent breach of such condition or provision or
a waiver of a similar or dissimilar provision or condition at the same
or at any prior or subsequent time; nor shall the receipt or acceptance
of compensation or other benefits following any termination of the
Executive's employment be deemed a waiver of any condition or provision
hereof.
9. SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, the remainder of this agreement shall nevertheless remain
in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances.
10. CHOICE OF LAW. The formation, construction and performance of this
agreement shall be construed in accordance with the laws of California.
11. INTEGRATION. This Agreement contains the entire agreement between the
parties and supercedes all prior oral and written agreements,
understandings, commitments and practices between them, including all
prior employment agreements, whether or not fully performed by Executive
before the date of this Agreement. No oral modifications, express or
implied, may alter or vary the terms of this Agreement.
12. VENUE. Any action brought to enforce the terms of this agreement shall
be commenced, prosecuted and defended exclusively in the State or
Federal court of the State of California located in Orange County,
California.
<PAGE>
13. ATTORNEY'S FEES. In the event of any legal action (including any appeal
of a judgement) in connection with the Agreement, the prevailing party
shall be entitled to reimbursement of reasonable attorneys' fees and
costs and expenses (including court costs) incurred in connection there
with.
IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer of the Company, have executed this Employment Agreement as of the
first day of March, 1999
COMPANY
eSYNCH CORPORATION (Board of Directors)
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
EXECUTIVE
---------------------------------------
David P. Noyes, an individual
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS ON JUNE 30, 1999, AND STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 34,547
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 87,593
<CURRENT-ASSETS> 928,894
<PP&E> 668,724
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,058,123
<CURRENT-LIABILITIES> 3,289,556
<BONDS> 0
600
263
<COMMON> 9,797
<OTHER-SE> 2,335,754
<TOTAL-LIABILITY-AND-EQUITY> 6,058,123
<SALES> 917,400
<TOTAL-REVENUES> 917,400
<CGS> 459,944
<TOTAL-COSTS> 6,559,819
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (6,559,819)
<INTEREST-EXPENSE> 60,839
<INCOME-PRETAX> (6,553,358)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,553,538)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,553,538)
<EPS-BASIC> (0.78)
<EPS-DILUTED> (0.78)
</TABLE>
